UK’s Hulu-style Project Kangaroo shot by government hunters

The UK's Competition Commission has just shot its first kangaroo—Project Kangaroo, a proposed Hulu-style joint venture from the UK's three leading programmers. According to the Commission, no proposed remedies would have been good enough to create any sort of competition in the video-on-demand (VOD) market, so the service cannot go ahead.

Kangaroo was to feature both "archival" (old) and "catch-up" (recent) content from ITV, Channel 4, and the BBC. Nearly all of the material would be free to consumers thanks to the magic of advertising, and it would all be available from a single site.

The idea bounded into life in 2007, but by the middle of 2008, the Competition Committee was involved over worries that the UK VOD market would now essentially belong to a single company. According to the Committee's final report on the matter, out today, without Kangaroo the three programmers "were, or would be in the future, each other's closest competitors for the supply of UK VOD content." Any other company wanting to offer a competitive service with content produced in the UK would essentially have to pay whatever Kangaroo asked, and the joint venture would have great control over advertising rates for VOD content.

The companies affected issued a joint statement saying, "We are disappointed by the decision to prohibit this joint venture. While this is an unwelcome finding for the shareholders, the real losers from this decision are British consumers. This is a disproportionate remedy and a missed opportunity in the further development of British broadcasting."

The newspapers are already taking sides. A Telegraph columnist argues that the decision was correct. "The collaborators in project Kangaroo control the vast majority of UK-created video content," writes Ian Douglas. "Barring a few podcasters and some very minor digital channels almost no one is making television in this country without reference to these three organisations.

"Bringing them together into a single bargaining unit for video on demand is an unacceptable state of affairs, an online cabal, and the Competition Commission were in the dead centre of their remit to say that it could not go ahead."

But a Times columnist is outraged, pointing out that some third party like YouTube could apparently sign deals with all three broadcasters and launch a nearly identical service without problems. "But if the BBC, ITV, and Channel 4 want to own the website, that's wrong—because they share the profits from the programmes they commission. How outrageous is that? The Commission is worried that they will not supply their programmes to YouTube, or other competitors on a fair basis.

"Well, it's not very complicated to get round that. The broadcasters should be forced to sell their content on a fair, reasonable and non-discriminatory basis to all comers, and they should sell it individually. A wholesale price could even be set by the regulator, like the ones set for BT when it comes to broadband, if it is that important."

But the deed is done and Kangaroo appears to have hopped its last hop. Each broadcaster will continue its own Internet delivery experiments, but a central hub for UK-produced TV remains out of reach.

I can't see the issue, if each broadcaster is responsible for selling advertising on their own content (BBC for shows like Spooks, ITV for CL Football, C4 for Skins etc) then they'd still be competing to get the best shows to attract the viewers. It'd just make one platform for them to compete on.

At the moment I don't use any of the other channels VOD setups because they're all crap and only work on IE, BBC iPlayer works on all platforms (Linux etc) and all browsers (that support Flash). Would have led to more competition if they were competing in one place (ala how there is one TV standard and one radio standard).

The Competition Commission seem to be confusing the platform with the content. The broadcasters already share several delivery platforms (analogue, DTT etc.) and no-one is suggesting that's anti-competitive. As long as others are given access to the platform on reasonable terms what's the problem?

I assume that the companies were not willing to agree to terms similar to what the Times columnist described. Hopefully that is why this decision was made. If they were willing to sell their content to any other site for a fair price, than this decision was ridiculous.

Kangaroo, and Hulu, extended to a much broader level, is what needs to happen. One site with nearly all the professionally produced content available. Available for some reasonable fee, if need be. (Hell, I would pay $100 a month if I could have access to a website with all the premium channel shows, basic cable shows, and broadcast shows, available 24/7)

The thing about the UK is that people are taxed by the televisions they use. The idea is that the BBC television channels are publicly funded entities so that the taxes go to fund programming.

Of course money is fungible so it's complete horseshit that X tax goes to Y while Foo tax goes to 'Zed'. It's all taxes and all taxes get used in whatever way the government seems fit. It's a bit like the the white lie about the 'Social Security Lockbox'.. there is no social security lockbox and there is really no way, nor any point, in determining what form of tax goes to pay for anything. It's all just taxes.

So I figure the real reason why they are not planing on going with the Kangeroo is because the government hasn't figured out a palatable way to tax it yet and they are afraid of losing income from TV taxes. If people get used to using online services as a way to avoid spending more money on stuff, then the government will face much more opposition to taxing it.

However if they put people off of it for another couple years they'll figure out how to tax it and make people pay the government for content they watch online without actually admitting that's what they want to do. It'll be some tricky thing like 'Feed the dying children fund' or some horseshit like that. Misdirection, which is typical government behavior.

Currently the only condition under which the TV license would not go toward public broadcaster finance (under the current scheme) is if the Department of Culture, Media and Sport failed to spend all of it. Arguably given that the Department of Work and Pensions pays directly for some licenses, the BBC tends to get more out of the fund than it gets in. (Except maybe when the DCMS were subsidising Channel 4, our other public broadcaster, during the digital switchover.)

(Oh, and apparently BBC World gets money from the Foreign Office as well, so...)

(You are right about the common principle however. E.g. I don't believe NI contributions are in anyway protected or pre-Appropriated say.)

I understand the concern of Competitions Commission. It's that a consolidated service, whilst still allowing for competition with content, will prevent technical competition. I think that it is only the apparent success of the iPlayer and it's mobile incarnations that has pushed ITV (not that I care for the content much) into improving its online offering so much. Although 4oD's continuing Windows-only-ness is a concern.

I do find it a concern that it has resulted like this. I sincerely hope that enough sense comes together for the project to go ahead.

Of course money is fungible so it's complete horseshit that X tax goes to Y while Foo tax goes to 'Zed'.

With the TV license, nearly all the money does indeed go to the BBC. It's collected and enforced by a different agency to the inland revenue, so it's never accessible by the government in the way you suggest.

quote:

So I figure the real reason why they are not planing on going with the Kangeroo is because the government hasn't figured out a palatable way to tax it yet and they are afraid of losing income from TV taxes.

Nope, they've already figured that one out. If you're watching BBC content in the UK you have to pay the license fee however you get it: the BBC's iPlayer site is covered with warnings to this effect. It would be a slightly more grey area if this service was only carrying commercial channels: as things stand, I think you'd be able to watch them without paying the license fee (which would make something like this the only way of watching TV without paying).

Actually, I think the service probably wouldn't have had this problem with the competitions commission in that case, as the issue they are probably concerned about is the BBC's natural monopoly. The BBC is subject to many constraints on what it can and can't do as a result of this.

This decision is still stupid, it's akin to saying that each broadcaster must erect separate transmission towers, because to share them would be dangerously anticompetitive. In fact it's slightly worse than that: the existing on demand services are pretty incompatible, so you'd have to have a separate TV tuner for each channel you wanted to watch. The competition exists in the form of the content, not in the mechanism by which it is delivered.

Of course money is fungible so it's complete horseshit that X tax goes to Y while Foo tax goes to 'Zed'.

With the TV license, nearly all the money does indeed go to the BBC. It's collected and enforced by a different agency to the inland revenue, so it's never accessible by the government in the way you suggest.

Um, that's not quite true, it still enters the UK's Consolidated Fund I believe, but it's already spoken for by a Government Dept., with the express and limited purpose of funding public broadcasters.

Edit:I'm sodding confused by the Appropriation Act 2008...

Edit2:No, it's still there:'Payments to the British Broadcasting Corporation for broadcasting and other services and activities; and associated non-cash items.'- £2,971,400,000

In their preliminary findings in December, regulators suggested ways to ameliorate the potential anti-competitive effects of the venture. Today's decision means none of the measures, including forcing Project Kangaroo to supply competitors with programming on a price-controlled wholesale basis, was found strong enough.

It's odd that they wouldn't agree even if they were willing to sell the rights onto other platforms.

Um, that's not quite true, it still enters the UK's Consolidated Fund I believe, but it's already spoken for by a Government Dept., with the express and limited purpose of funding public broadcasters.

Edit:I'm sodding confused by the Appropriation Act 2008...

Wellll, my Direct Debit goes straight to the TV Licensing Agency, which is a department (or subsidiary, perhaps?) of the BBC operated on their behalf by Capita.

Where the money goes after that is a different matter, of course, and it'd be fairly typical for the whole lot to be sent to the Treasury just to be dished back out to the BBC…

But, to return to the point: both the quoted articles are correct. In its proposed form, Kangaroo would be anticompetitive, but fixing it is also straightforward. However, the "easy" fixes aren't necessarily things the broadcasters would want to do, and it's entirely possible that they would prefer to walk away than they would make the concessions.

Anybody with enough cash and who is willing to comply with the various legal requirements and regulatory obligations could theoretically set up a TV channel (it wasn't that long ago that Five did it on analogue terrestrial, and new channels pop up and die on Freeview, cable and Sky all the time). The same couldn't be said for Kangaroo—and when you consider that the costs are much lower, the barrier to entry also needs to be in order to be "fair".

In the YouTube example, YouTube isn't owned or controlled by the content providers: they don't get much of a say in how things are done. They may well have influence, but they have no direct control, and there's nothing the BBC can do (besides pull its own content) if ABC starts putting its stuff on there.

The solution the CC is clearly angling for (or rather, most likely to be universally palatable) is something akin to YouTube, but aimed at professionally-produced broadcast content (both that which has been broadcast and that which is of a similar quality and hasn't been, as well as live streaming) owned by somebody other than the BBC/ITV/Ch4, and not directly answerable to them except in terms of the normal commercial contract agreements. If Teachers TV wants to come along and stick its content up, negotiations happen on the same terms as with anybody else, and so forth.

The enforced wholesale pricing/non-discriminatory licensing idea is nice, and would achieve the same goals, but I can't see the broadcasters going for it, as it would mean relinquishing too much control; not only that, but in order to satisfy the regulators it'd end up being a pretty complex affair (and so costly to the taxpayer). It would have some nice side-effects: for example, Apple would be able to pick up every broadcast TV show in the UK and offer it on the iTunes Store, and if they did it right it could make/break the Apple TV in the UK; other people dipping their toes into the set-top media game would have similar opportunities.

It's worth noting that the CC rejected mandatory licensing, though they rejected it as a concession in the scenario where Kangaroo was built anyway, rather than as an alternative route to giving consumers the same end result (by way of third parties). I don't think the CC would ever object to wholesale licensing of the content as a proposition in its own right—unless there was some kind of cartel going on.

Originally posted by Orcas:I can't see the issue, if each broadcaster is responsible for selling advertising on their own content (BBC for shows like Spooks, ITV for CL Football, C4 for Skins etc) then they'd still be competing to get the best shows to attract the viewers. It'd just make one platform for them to compete on.

At the moment I don't use any of the other channels VOD setups because they're all crap and only work on IE, BBC iPlayer works on all platforms (Linux etc) and all browsers (that support Flash). Would have led to more competition if they were competing in one place (ala how there is one TV standard and one radio standard).

Doesnt Linux support Silverlight with Mono? As silverlight is what itv use...

Nope, they've already figured that one out. If you're watching BBC content in the UK you have to pay the license fee however you get it: the BBC's iPlayer site is covered with warnings to this effect. It would be a slightly more grey area if this service was only carrying commercial channels: as things stand, I think you'd be able to watch them without paying the license fee (which would make something like this the only way of watching TV without paying).

ahunter, you're incorrect here.

The licence fee is only mandatory if one is watching live-broadcast content. iPlayer is not live and no licence fee is required to view it. Please post a link to any iPlayer web page which states otherwise - I can't find any of these warnings the site is apparently 'covered with'.

The licence fee is only mandatory if one is watching live-broadcast content. iPlayer is not live and no licence fee is required to view it. Please post a link to any iPlayer web page which states otherwise - I can't find any of these warnings the site is apparently 'covered with'.

The web-based iPlayer offers live streams of eight of the BBC channels, as well as on-demand content. So you need a TV Licence to watch this (the licence warning is near the bottom of the page), but you don't need one to watch this.